Event: Jufei Optoelectronics released its 2020 report showing that revenue reached 1 billion in the first half of 2020, down 12.75% from the same period last year, and net profit returned to its home was 143 million, down 2.4% from the same period last year. The gross profit margin of sales in the first half of the year was 28.99%, up 1.07% from the same period last year; the gross profit margin in the second quarter was 30.13%, up 1.76% from the same period last year.
With the transfer of LED industry, the share of backlit Longtou City continues to rise. In recent years, with the continuous decline of the cost and price of the whole industry chain of LED, Japan, South Korea, Taiwan and other regions gradually fade out of some LED segments. Jufei Optoelectronics, which is in a leading position in the global market, can undertake the transfer of orders in the industrial chain, which can also be effectively demonstrated by the company's rising share in the LED backlight market in recent years. Although revenue and profits declined slightly in the first half of the year affected by the COVID-19 epidemic, with the epidemic at home and abroad gradually under control, the company's business is also gradually on the right track. In the future, as the global LED industry chain continues to shift to the mainland, the company's market share and business scale are expected to climb another tall building.
Automotive electronics against the trend growth, backlighting two-wheel drive. In the first half of 2020, under the circumstances of a sharp decline in global car sales, the company's automotive LED business still maintains strong growth against the trend, in which automotive backlight LED has been widely used in domestic terminal mainframe factory instruments and liquid crystal display screens, automotive lighting LED has entered Chery, BYD, Jianghuai and other supply chain systems, the fast-growing performance reflects the company's forward-looking layout and continuous R & D investment. Different from consumer grade LED lighting and backlight products, automotive electronics are significantly higher than traditional customers in terms of product quality, stability, value, barriers to entry and customer stickiness. It is precisely because of this "easy to defend and difficult to attack" industry characteristics that Jufei Optoelectronics, which has successfully entered the automotive electronics supply chain, has obviously built a strong moat effect. In the future, with the breakthrough of more categories and more customers in this field, the company's automotive LED business is expected to maintain the current good momentum.
Convertible bonds raise funds to expand production capacity and effectively alleviate the bottleneck of development. With the continuous development and development of the company's business, global sales orders continue to increase, and the capacity bottleneck is obvious, which seriously restricts the company's business to become bigger and stronger. Therefore, there is an urgent need for the company to expand product capacity to meet the growing global market demand. In 2020, the company raised 700 million yuan by issuing convertible bonds to expand the production capacity of backlit, display and automotive LED and alleviate the bottleneck of the company's production capacity. With the production capacity of the fund-raising project on the ground, the company's performance is expected to increase significantly.
Mini LED backlight trend is clear, active layout to strive for the top. In 2020, it has been reported that Apple Inc, Huawei, Samsung and other terminal manufacturers plan to launch Mini LED backlight products within this year or early next year, including pad, computers, televisions and so on. Take the global TV and panel giant Samsung as an example, after its withdrawal from the LCD display panel industry, it focuses on laying out the new display technology represented by miniLED. According to relevant media reports, Samsung may launch 3 million miniLED backlit TVs in 2021. It can be seen that under the strong promotion of the world's most influential consumer electronics brands, mini shows that new forces are expected to lead LED back into the spotlight. As a backlight leader, Jufei Optoelectronics has been supplied by global core TV manufacturers for many years, and it also has a lasting R & D layout in the field of mini LED, so the growth momentum should not be underestimated.
Profit forecast and investment rating: cover for the first time and give an overweight rating. In the environment of the transfer of the global LED industry chain to the mainland and the rapid rise of miniLED, whether it is the continuous increase in the market share of the traditional backlight business stock market, or in the miniLED incremental market, Jufei Optoelectronics is expected to show its skills. It is estimated that the company will achieve a net profit of 3.12,4.11 and 537 million yuan from 2020 to 2022, and the current market capitalization corresponding to PE is 29.43,22.34,17.11 times respectively. Give the company an overweight rating.
Risk Tips:
1) the spread of the global epidemic exceeded expectations; 2) the uncertainty of downstream demand caused by trade frictions; 3) the acceptance of mini LED backlit market was not as expected; 4) the implementation progress of fund-raising projects was not as expected.